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Thursday, April 08, 2010

TRAVESHMOCKERY


Well I talk about this constantly and go through periods where even though I know it happens, I let it go and others where it irks me. One of my favorite commercials is the one where the guy is yelling it is a Travesty a Sham and a Mockery, stutters then says "It's a Traveshmockery!"

What the US government is doing in the index futures is clearly that. It has never been this blatant, and I am shocked that more is not being made of this. Yesterday was another clear example of the market rolling over and starting to pick up some downside momentum. Then "magically again in the last 45 minutes a big reversal back up. Folks no matter how you cut it, this is just not right and mark my words this artificial inflating of this whole uptrend is going to be a big problem at some point. It is not a big deal to allow the market to correct for a few days, then move higher again. By forcing it up virtually every day they are not doing us any long term favors here believe me.

It is my opinion that there is no way any fund or large individual trader would have put on a buy program when this last minute save occurred again yesterday. Literally every day that I can remember when we have been down over 50 points in the Dow coming into the last hour, we have had a significant rally into the close. The markets are very random, this is far beyond what would be a normal distribution of price movement. It is artificial.

There are certain parameters that are generally used and they were not at levels that would generate this type of thing at that point yesterday. I do have to admit I am biased because I am short the Naz futures and some individual stocks. However, this is a topic I talk about repeatedly in here. I guess my blog is not widely enough read to have been brought to Barry's henchmens attention. I have no doubt if it were, they would be threatening me like they seem to do with everyone else behind the scenes that does not agree with them.

The odd thing about this which I cannot explain is how they are managing to keep large funds from large scale sell programs at the times in a balanced market you would normally see them. I supposed behind the scenes incentives or some other such "deal" or "conversation" might be taking place. It might be being suggested that it would not be a good idea to launch any major sell programs? I have no idea and no proof whatsoever about anything along those lines that might be going on. I do know that this is the most unbalanced stock market situation I have ever seen in my career from this standpoint. Even the big bull market of the late 90's was not like this.

With all that aside I will stay with my short with no expectation at all of a win. These guys are just not going to let this market even have a minor correction the way it looks right now. Below is one of the individual stocks you can see I shorted yesterday, FEDEX. Will any of them work? Who knows? I did decide not to short the Q's and QID with my futures short yesterday just because I want to be light on this position. The way the PPT is controlling things I just don't see any reason to get overly excited on the short side right now. I only shorted 700 shares here, but once you do 4 or 5 trades like that you use up 400k of margin really quick.



May the force be with you, which in this case is the PPT on the long side!

8 comments:

jg said...

"...I cannot explain is how they are managing to keep large funds from large scale sell programs..."

Incriminating photos?

The great unwind is beginning, Chris: L.A. threatening to close government offices two days per week, Bank of America about to ramp up foreclosure proceedings, long-term interest rates moving up, etc.

The PPT, Fed, and Treasury only have two hands and ten fingers, and the dam is springing new leaks every day.

I saw what I believe were their fingerprints in the market over '07 and '08. Ultimately, self interest/preservation prevailed, and their 'save the market' efforts were overrun.

I feel very comfortable that the same thing will happen again this year.

Chris Johnston said...

If they can keep volume out of the markets like they have been able to so far, they can keep this up indefinitely. They do not have enough clout to stop a high volume decline, but the light ones they can stop with a phone call. That is what happening during the crash, heavy volume came in and they do not have enough buying power to fight off that type of volume.

robert said...

Chris, with real estate in the tank, the speculative money has to move somewhere - and it's probably moving into the stock market.

While I agree with you about the PPT, you can't overlook the fact that a bull market does indeed attract capital and then feed upon itself.

Chris Johnston said...

If that was the case the volume would be high not low and also increasing.

This is not that, there has never been anything like this.

Go study premium discount relationships and when they trigger buy/sell programs. Then go look at the late day saves and what those readings are when they start. These programs are not occuring at the times these numbers are in the zones. There is only one explanation for that.

In the past it was never this blatant and I have watched this for years

robert said...

Excellent point about volume not increasing.

So where is the global spec money going?

It has to go somewhere, right?

Chris Johnston said...

I think that volume could come here and if it does, we could see new all time highs in stocks. It is hard to say where it is going but my theory is that alot of money is just gone from this last cycle. Some is chasing the oil and metals markets, some is in the far east chasing those markets.

If we do happen to get a big move in that type of thing our stock market here could explode higher. I know everyone wants to say we should go way down due to alot of underlying problems which we all know are there. However, as we have seen markets can remain irrational longer than we can remain solvent fighting the moves.

My post today will talk about this

robert said...

re: low volume in the U.S stock market and the PPT - revisited

Chris, because the world stock markets seem to be moving in sync, can you tell me if the non-U.S. markets are also rising on low volume?

Or is this phenomenon only applicable to the U.S. market?

Chris Johnston said...

not sure, but I would venture to guess China has good volume just because of how strong their economy is.